LLOG Exploration Company, L.L.C. v. Federal Flange, Inc.

CourtDistrict Court, E.D. Louisiana
DecidedSeptember 15, 2021
Docket2:17-cv-02323
StatusUnknown

This text of LLOG Exploration Company, L.L.C. v. Federal Flange, Inc. (LLOG Exploration Company, L.L.C. v. Federal Flange, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
LLOG Exploration Company, L.L.C. v. Federal Flange, Inc., (E.D. La. 2021).

Opinion

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA

LLOG EXPLORATION COMPANY, CIVIL ACTION LLC NO. 17-2323 VERSUS SECTION M (4) FEDERAL FLANGE, INC.

ORDER & REASONS Before the Court is a motion by third-party defendant R.N. Gupta & Company Limited (“RN Gupta”) for summary judgment1 to dismiss all claims asserted against it by third-party plaintiff Federal Flange, Inc. (“Federal”). Both Federal and third-party defendant, cross-claimant, and third-party plaintiff CGP Manufacturing, Inc. (“CGP”) oppose the motion,2 and RN Gupta replies in further support of its motion.3 Having considered the parties’ memoranda, the record, and the applicable law, the Court issues this Order & Reasons denying the motion because unresolved issues of material fact preclude summary judgment at this juncture. I. BACKGROUND This case arises from Federal’s sale to LLOG Exploration Company LLC (“LLOG”) of four allegedly defective target elbows, which were then installed approximately 6,500 feet deep in the Gulf of Mexico on LLOG’s wells.4 Fifteen months after installation, LLOG discovered that two of the elbows had cracked.5 Testing revealed that the cracks were caused by voids formed during the forging process, rendering suspect the other two target elbows machined from solid tee 1 R. Doc. 219. 2 R. Docs. 224; 226. 3 R. Doc. 229. 4 R. Doc. 219-1 at 2. 5 R. Doc. 224 at 2-3. forgings processed from the same steel at the same time.6 LLOG shut down its well operations to remove and replace all four of the target elbows, allegedly resulting in millions of dollars of damage.7 The four target elbows were the product of a series of transactions.8 First, Bhushan Power & Steel Limited (“Bhushan”) sold raw steel material to RN Gupta.9 Second, RN Gupta “cut,

heated, forged, quenched, and tempered the steel into specifically sized and shaped tee forgings.”10 These solid tee forgings contained the voids that caused the target elbows to crack after LLOG installed them on its wells.11 Third, RN Gupta, through third-party defendant Silbo Industries, Inc. (“Silbo”), supplied its solid tee forgings to CGP.12 RN Gupta classified the forgings it sold as “semifinished” products that complied with certain oil-and-gas industry standards, including: (1) ASTM-A694, a standard specification covering “forged or rolled steel pipe flanges, forged fittings, valves, and parts suitable for use with high-strength transmission-service pipe”; and (2) MSS- SP75, an industry specification covering “factory-made, seamless and electric fusion-welded carbon and low-alloy steel, butt-welding fittings for use in high pressure gas and oil transmission and distribution systems, including pipelines ....”13 Thus, RN Gupta was aware that the solid tee

forgings it sold had to be machined, or “hollowed out,” to permit a substance to flow through them in their end use.14 Fourth, CGP hollowed out RN Gupta’s solid tee forgings, machining them into

6 R. Docs. 219-1 at 2 & n.1; 224 at 2-3; 226 at 3. 7 R. Doc. 166 at 2. 8 See R. Doc. 224 at 3-5. 9 Id. at 4. 10 Id. at 2. 11 R. Docs. 219-1 at 2 n.1; 224 at 8. 12 R. Doc. 219-1 at 5-6. 13 R. Doc. 224 at 7. 14 R. Doc. 226 at 7-8. target elbows, and sold and delivered them to Federal.15 Finally, Federal machine finished the four target elbows, and sold and delivered them to LLOG, which installed them on its wells.16 LLOG sued Federal for breaches of express and implied warranties; breach of contract; violation of the Louisiana Products Liability Act (“LPLA”); redhibition; negligence; and detrimental reliance.17 Federal brought a third-party complaint against RN Gupta, CGP, and G&S

Non-Destructive Testing, Inc. for indemnification or contribution.18 CGP filed a crossclaim against RN Gupta, and a third-party complaint against Silbo, for indemnification or contribution.19 LLOG settled and dismissed its claims against Federal.20 Only third-party claims remain in this action.21 II. PENDING MOTION RN Gupta argues that it is entitled to summary judgment on Federal’s claims for product liability and redhibition because it is merely a supplier of raw material, not a manufacturer, and therefore it is exempt from liability under either theory.22 Only a manufacturer may be held liable under the LPLA, says RN Gupta, and it maintains that its tee forgings were the raw material that

CGP and Federal used to manufacture a wholly different (and allegedly defective) product: the target elbows.23 Additionally, RN Gupta argues that Federal’s claim for redhibition must fail because RN Gupta never manufactured, produced, or sold the defective product (the elbows) to Federal,24 and a redhibition claim does not lie against a supplier of raw material, like itself.25

15 R. Doc. 166 at 4. 16 Id. 17 R. Doc. 1. 18 R. Docs. 9; 20; 166. 19 R. Docs. 58; 166. 20 R. Docs. 162; 164; 166. 21 R. Doc. 166 at 4. 22 R. Doc. 219-1 at 1-2. 23 Id. at 11-12. 24 Id. at 13-14. 25 Id. at 14. In opposition, Federal argues that the LPLA does apply because RN Gupta is, in fact, a manufacturer of the target elbows and not merely a supplier of raw material.26 Federal asserts that RN Gupta is a manufacturer because it knew, or, at the very least, reasonably anticipated, that its tee forgings would be hollowed out to become a product like the target elbows.27 Federal argues

that RN Gupta is liable as a manufacturer under the LPLA because the voids that caused the target elbows to crack existed in the forgings when they left RN Gupta’s control. Federal also argues that RN Gupta is liable in redhibition not only because RN Gupta is a manufacturer, but also because a “buyer may bring [such] an action against all sellers in the chain of sales back to the original manufacturer,” which includes RN Gupta.28 In its opposition, CGP joins Federal in urging that RN Gupta is a manufacturer under the LPLA because the target elbows were not wholly separate products from RN Gupta’s tee forgings; rather, the tee forgings were solid pieces of metal from which the target elbows were machined.29 CGP contends that the change from a tee forging to the finished target elbow is a “reasonably anticipated alteration or modification” that falls within the scope of the LPLA30 and that the alleged defect in the target elbows was present from the time RN Gupta manufactured the tee forgings.31

CGP also argues that RN Gupta is liable in redhibition because the target elbows were essentially the same product as the forgings and because the redhibitory defect in the elbows (the voids) was allegedly present from the time the forgings were manufactured.32

26 R. Doc. 224 at 10-11. 27 Id. at 11-12 (citing R. Do c. 219-13 at 25). 28 Id. at 16-17 (quoting Lovell v. Blazer Boats, Inc., 104 So. 3d 549, 553 n.3 (La. App. 2012)). 29 R. Doc. 226 at 5. 30 Id. at 7-8. 31 Id. at 9. 32 Id. III. LAW & ANALYSIS A. Summary Judgment Standard Summary judgment is proper “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to

any material fact and that the moving party is entitled to a judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (quoting Fed. R. Civ. P. 56(c)). “Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial.” Id.

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LLOG Exploration Company, L.L.C. v. Federal Flange, Inc., Counsel Stack Legal Research, https://law.counselstack.com/opinion/llog-exploration-company-llc-v-federal-flange-inc-laed-2021.